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A jump in interest costs, increase in material costs and pressure on the margins, and higher inventory holding due to delayed off take by overseas customers has wheeled down Q2 profit of Wheels India Ltd, a top company official said on Tuesday.

Managing Director Srivats Ram also said the company is deferring some of the earlier planned capex and cutting down the inventory level to manage the interest burden.

"The Reserve Bank of India (RBI) has been raising the interest rate s (repo rate) which in turn has increased our finance cost. There is pressure on the margins though steel prices went up. The working capital was also higher," Ram told reporters here.

The company's finance cost for the second quarter stood at Rs 22.61 crore, up from Rs 13.70 crore for the same period the previous year.

Wheels India registered a net profit of Rs 15.14 crore for Q2FY23, down from Rs 21.2 crore for the same period last year.

The reassessment of the useful life of certain plant and machinery resulted in a reduction in the charge of depreciation for the period under review by Rs 8.17 crore, Wheels India said.

Revenues for Q2, ended September 30, 2022 went up by 22 per cent to about Rs 1,109 crore from about Rs 911 crore registered in the corresponding quarter of the previous year.

According to Ram, the focus is on depleting the inventory and holding back the capex that can be deferred. The company will try not to take fresh debt and manage with the free cash flows.

Nevertheless, Wheels India, which spent Rs 86 crore as capex during the first half of the current fiscal, will tone it down and end the year with a capex of Rs 150 crore.

"Large part of the capex will for a machining plant near a company that makes castings. We will machine the castings and send it back," Ram said.

According to him, the demand of buses is picking up nearly after three years and the company's air suspension business is expected to do well.

On the exports side, Ram said it is expected to pick up from December onwards.

"Construction equipment makers in the US and Japan are talking about growth. What has dried up is the demand from the developing countries affected by the strengthening of the dollar," he said.

Wheels India rolls out wheels for trucks, agricultural tractors, passenger vehicles and construction equipment, air suspension systems for trucks and buses, and industrial components for the construction and windmill industry with manufacturing plants at Tamil Nadu, Maharashtra, Uttar Pradesh, and Uttarakhand.